]]>waytoohighMerchants Reach Landmark $7.25 Billion Settlement with Visa, MasterCard and Major U.S. Banks for Alleged Anticompetitive Practices and Price Fixing In Setting Interchange Feeshttps://waytoohigh.wordpress.com/2012/07/13/merchants-reach-landmark-7-25-billion-settlement-with-visa-mastercard-and-major-u-s-banks-for-alleged-anticompetitive-practices-and-price-fixing-in-setting-interchange-fees/
Fri, 13 Jul 2012 22:34:18 +0000http://waytoohigh.wordpress.com/2012/07/13/merchants-reach-landmark-7-25-billion-settlement-with-visa-mastercard-and-major-u-s-banks-for-alleged-anticompetitive-practices-and-price-fixing-in-setting-interchange-fees/MINNEAPOLIS, July 13, 2012 /PRNewswire via COMTEX/ — Robins, Kaplan, Miller & Ciresi L.L.P. has reached an historic $7.25 billion settlement on behalf of a class of approximately seven million merchants in the United States who accept Visa and MasterCard credit cards and debit cards. The settlement is with payment card networks Visa and MasterCard and with card-issuing banks, including JPMorgan Chase, Bank of America, Citibank, Wells Fargo, Capital One and other major banks.

Robins, Kaplan, Miller & Ciresi L.L.P. filed the case in 2005, and was appointed by the United States District Court for the Eastern District of New York, along with two other law firms, to represent the class in the case. The settlement that has now resolved the case is believed to be the largest ever settlement of a private antitrust case under the Sherman Act (15 U.S.C. section 1 et seq.).

The settlement terms include a cash payment and significant reforms of Visa and MasterCard rules and business practices. The cash component of approximately $7.25 billion consists of a payment for alleged past damages in the amount of $6.05 billion, and a further payment representing the value to merchants of a temporary reduction in the level of interchange fees paid by merchants on Visa and MasterCard credit card transactions, estimated to have a value of $1.2 billion. The reforms of rules and business practices include modifications of network rules previously enforced by Visa and MasterCard relating to activity at the point-of-sale, as well as a new requirement that Visa and MasterCard negotiate with merchant-organized buying groups. The modification of these network rules will provide additional value to merchants of many billions of dollars by enabling merchants to provide greater transparency to consumers regarding the cost of using various types of payment methods, and permitting merchants to negotiate collectively over interchange fees and other aspects of their relationships with Visa and MasterCard. It is expected that the reforms required by the settlement will enable merchants to put pressure on Visa and MasterCard to limit or reduce interchange fees, among other things.

“The reforms achieved by this case and in this settlement will help shift the competitive balance from one formerly dominated by the banks which controlled the card networks to the side of merchants and consumers,” states K. Craig Wildfang, who led the case for the Class Plaintiffs as co-lead counsel and partner at Robins, Kaplan, Miller & Ciresi L.L.P. “Over time, the reforms induced by this case and in this settlement should help reduce card-acceptance costs to merchants, which in turn, will result in lower prices for all consumers.”

Martin R. Lueck, Chairman of the Executive Board at Robins, Kaplan Miller & Ciresi L.L.P. adds, “These reforms go a long way to achieving price transparency for the most heavily used form of payment in the United States, which will benefit consumers.”

“As an ecommerce business who has to rely on credit cards, this historic settlement and the reforms it brings will provide both immediate and lasting benefits for small merchants,” states Mitch Goldstone, President & CEO of ScanMyPhotos.com, a division of Photos Etc. Corporation.

The case is In re Payment Card Interchange Fee and Merchant Discount Litigation, 05-MD-1720 (JG)(JO). The other two co-lead counsel law firms that represent the class of merchants are Berger & Montague, P.C. and Robbins Geller Rudman & Dowd LLP.

About Robins, Kaplan, Miller & Ciresi L.L.P.

Robins, Kaplan, Miller & Ciresi L.L.P. ( http://www.rkmc.com ) is one of the top trial firms in the country. The firm’s clients include numerous Fortune 500 corporations, emerging markets companies, entrepreneurs, and individuals as both plaintiffs and defendants. Robins, Kaplan, Miller & Ciresi L.L.P. is frequently engaged in high-stakes, complex litigation with significant bottom-line implications for their clients, and the business lawyers handle complex transactions in a variety of market segments. The firm has more than 250 lawyers located in Atlanta, Boston, Los Angeles, Minneapolis, New York and Naples (FL).

Robins, Kaplan, Miller & Ciresi L.L.P. received The National Law Journal’s 2011 Pro Bono Award and was selected as a Pro Bono Firm of 2010 by Law360. The American Lawyer ranked the firm eighth in the country in the 2011 Pro Bono Survey, and twice named the firm to the A-List (2007 and 2004). The firm has regularly received a top ranking for litigation from Chambers USA and was chosen as a “Go-To Law Firm” by Corporate Counsel.

The dust has barely settled over the debit card fee-flap but there’s more news from the big banks regarding fees. The good news is that it’s not all bad this time — both Bank of America and Chase have abandoned fees that were under consideration or in the testing phase. Meanwhile, though, banks are quietly calculating which other ones can take their place.

The top 10 retail banks are projected to lose $185 billion in deposits over the next year if they dont address consumer concerns, according to a recent study from cg42, a firm that consults with banks. Bank of America, Citibank, JPMorgan Chase and Wells Fargo account for nearly three-quarters of the loss, the study found.

A day after the anti-Durbin bill was introduced, congressional Democrats asked Attorney General Eric Holder to consider an anti-trust investigation of financial institutions on grounds they are colluding to create new fees to cover losses related to the Durbin Amendment’s debit interchange fee cap.

On Oct. 13, 2011, five Democratic congressmen led by Chief Deputy Whip Peter Welch, D-Vt., wrote Holder asking for the anti-trust investigation of “big banks [that] are coordinating their fee strategies in violation of federal anti-trust laws.”

For years, banks have had an arsenal of fees they could charge consumers to increase revenues, said Ed Mierzwinski, consumer program director of U.S. Public Interest Research Group, which published a report, Big Banks, Bigger Fees, earlier this year.

Not content to own just Mastercard (MA), Warren Buffett added Visa (V) to Berkshire Hathaway’s (BRKB) portfolio in the third quarter, according to a filing released after the market closed. Buffett reported owning 2.29 million shares of Visa in the quarter. He maintained his stake in MasterCard, which he also added to the portfolio this year, at 405,000 shares.

Intel Corporation and MasterCard Incorporated announced today a multi-year strategic collaboration to further enhance the security and consumer payment experience for online shopping. “MasterCard is constantly working to improve the shopping experience for consumers and merchants”The collaboration will combine MasterCard’s expertise in payment processing and commerce with Intel’s strengths in silicon innovation and chip-based security. It is designed to provide more options for a safer and simpler checkout process for online merchants and consumers using Ultrabook devices and future generations of Intel-based PCs.

Bank of America retreated this week from its planned introduction of a $5 monthly fee for many customers to use their debit cards. The bank said it “listened to our customers very closely” and decided that charging people money to access their money maybe wasn’t the best idea after all.

Nearly eight years after Visa Inc and MasterCard Inc agreed to pay more than $3 billion to resolve allegations that they conspired to raise stores’ fees for processing their payment cards, merchants returned to court on Wednesday to argue that the card companies still maintain a costly stranglehold on interchange networks.

U.S. District Judge John Gleeson heard oral arguments in Brooklyn federal court from a slate of lawyers representing the credit card companies, their issuing banks and the merchants over whether to proceed to trial on the latest round of antitrust allegations against the card companies’ and banks’ interchange networks, which process customers’ credit- and debit-card payments to stores.

Minneapolis attorney K. Craig Wildfang, lead attorney for the class plaintiffs, said he would not comment about the MasterCard disclosure. But Mitch Goldstone, president and chief executive of one of the named class plaintiffs, ScanMyPhotos.com in Irvine, Calif., said he believes the Occupy Wall Street anti-corporate demonstrators and their sympathizers are having an effect on the defendants.

“I’m having the best level of comfort since 2005 that this could be resolved very quickly,” Goldstone says. “Those [Occupy Wall Street participants] are the people that are going to be jurors next fall. The banks know it.”

Nearly eight years after Visa Inc and MasterCard Inc agreed to pay more than $3 billion to resolve allegations that they conspired to raise stores’ fees for processing their payment cards, merchants returned to court on Wednesday to argue that the card companies still maintain a costly stranglehold on interchange networks.

Mallory Duncan is Senior Vice President and General Counsel of the National Retail Federation (www.nrf.com), the world’s largest retail trade association whose global membership includes more than 1.5 million American companies that employ nearly 25 million workers. Readers may write him at NRF, 325 7th Street NW, Suite 1100, Washington, DC 20004.

Signs like, “I bailed out the banks and all I got was a $5 debit card fee” have been spotted the Occupy Wall Street protest in New York and its sibling protests around the country. The author of the regulations, Sen. Richard Durbin, D.-Ill, called the fee an “outrage” on the floor of the Senate.

Next on the agenda will be reform of credit card fees, which are even more excessive than debit fees and just as obscure.

In 2010, the banking industry raked in about $30 billion in swipe fees on credit card transactions – over and above profits on late fees, annual fees, over-the-limit fees and interest. Not only do banks require merchants to collect fees averaging 2-3 percent of each credit card transaction, until swipe fee reform passed they effectively prevented retailers from offering a discount to customers who paid with cash.

“It appears that banks are seeking to justify fee increases after Congress and the Federal Reserve Board recently limited banks’ ability to collude with networks to set debit interchange fees,” the letter said. “Statements made by individual banks and their trade associations raise questions about whether some price increases that have occurred this year have actually been coordinated.”

“Merchants are counting their new found gains at our expense and our elected officials still don’t comprehend the damaging impact of their misguided legislation,” wrote Patrick J. Swanick, a retired KeyBank vice chairman and former president of Key’s retail bank and CEO of Key Electronic Services, on October 10 in the American Banker.

“Whenever there has been frustration or negative publicity with other institutions, the credit union is where people turn,” Williams said. She added that the credit union does not plan to implement any fees on their checking accounts.

Greg Parker, president of Parker Cos., Savannah, Ga., has filed a lawsuit to block the state’s plan to end the way he advertises his PumpPal discount gasoline program, reported the Savannah Morning News. The suit asked Chatham County Superior Court Judge Louisa Abbot to temporarily halt new rules that would ban display of reduced debit-card gasoline prices.

“Whenever there has been frustration or negative publicity with other institutions, the credit union is where people turn,” Williams said. She added that the credit union does not plan to implement any fees on their checking accounts.